George and Weezy received $28,300 of Social Security benefits this year ($10,600

Question

George and Weezy received $28,300 of Social Security benefits this year ($10,600 for George; $17,700 for Weezy). They also received $4,600 of interest from jointly owned City of Ranburne Bonds and dividend income. What amount of the Social Security benefits must George and Weezy include in their gross income under the following independent situations?

George and Weezy file married joint and receive $8,350 of dividend income from stocks owned by George.

George and Weezy file married separate and receive $8,350 of dividend income from stocks owned by George.

George and Weezy file married joint and receive $31,400 of dividend income from stocks owned by George.

George and Weezy file married joint and receive $15,700 of dividend income from stocks owned by George.

George and Weezy file married joint and receive $8,350 of dividend income from stocks owned by George.

George and Weezy file married separate and receive $8,350 of dividend income from stocks owned by George.

George and Weezy file married joint and receive $31,400 of dividend income from stocks owned by George.

George and Weezy file married joint and receive $15,700 of dividend income from stocks owned by George.

Explanation / Answer

a.George and Weezy received $28,300 of Social Security benefits this year ($10,600 for George; $17,700 for Weezy) as George and Weezy file married joint, they can exclude the total social security benefits of $ 28,300 for this year. Calculation

$14,150 (50% of $ 28,300) +$4,600+$8,350 = $27,100 and if file married joint the minimum amount for the taxpayers is $ 32,000 below that they do not have to pay taxes

b.For married taxpayers filing separately lesser of 85 percent of their Social Security benefits or 85% of AGI plus 50 percent of Social Security benefits will be taxable

AGI = $14,150+$4,600+$8,350 = $27,100

Lesser of 85% of ($4,600+$8,350) or 85% $27,100 plus 50% of ($4,600+$8,350)

Lesser of $11,007.5 or $29,510

Therefore taxable income is $ 11,007.5

c.AGI= $14,150 (50% of 28,300) +$4,600+$31,400 =$ 50,150

If AGI More than 44,000

Lesser of—

·         85 percent of benefit income; or

·         (Lesser of 50 percent of benefit income or modified AGI in excess of $32,000) plus 85 percent of modified AGI in excess of $44,000

Lesser of 85 percent of benefit income = $30,600 or

18000 + 85% (50,150 – 44,000) = $ 23,227.5

Taxable amount is $ 23,227.5

d.AGI= $14,150 (50% of 28,300)+$4,600+$15,700 = $ 34,450

If AGI 32,000–44,000

Lesser of—

·         50 percent of benefit income; or

·         modified AGI in excess of $32,000

That is lesser of 50% of ($4,600+$15,700) = $10,150

Or $34,450 – $ 32,000 = $ 2,450

Therefore taxable amount is $2,450

If AGI More than 44,000

Lesser of—

·         85 percent of benefit income; or

·         (Lesser of 50 percent of benefit income or modified AGI in excess of $32,000) plus 85 percent of modified AGI in excess of $44,000

Lesser of 85 percent of benefit income = $30,600 or

18000 + 85% (50,150 – 44,000) = $ 23,227.5

Taxable amount is $ 23,227.5

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